Which of the following is correct?
A)Risk-averse people will not hold stock.
B)Diversification cannot reduce firm-specific risk.
C)The larger the percentage of stock in a portfolio,the greater the risk,but the greater the average return.
D)Stock prices are determined by fundamental analysis rather than by supply and demand.

Question

Quizplus · Accepted Answer

Diversification can reduce firm-specific risk, and risk-averse people may still hold stocks if they are part of a diversified portfolio. Stock prices are influenced by both fundamental analysis and supply and demand. Increasing the percentage of stock in a portfolio generally increases risk and potential return.

Which of the Following Is Correct